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7/28/2019 Santiago Nego
http://slidepdf.com/reader/full/santiago-nego 1/2
GSIS vs Court of Appeals and Mr. & Mrs. Racho, GR No. L-40824 February 23, 1989
Posted by Pius Morados on January 12, 2012
(Negotiable Instruments – payable to order or to bearer)
Facts: Spouses Racho together with Spouses Lagasca executed a deed of mortgage in favor of GSIS in connection with 2 loans
granted by the latter in the sums of p11,500.00 and p3,000.00, respectively. A parcel of land co-owned by the mortgagor spouseswas govern as security under the aforesaid deeds and executed a promissory note promising to pay the said amounts to GSIS
jointly, severally and solidarily.
The Lagasca spouses executed an instrument obligating themselves in the assumption of the aforesaid obligation and to secure therelease of the mortgage.
Failing to comply with the conditions of the mortgage, GSIS extrajudicially foreclosed the mortgage and caused the property to besold at public auction.
More than 2 years after, Spouses Racho filed a complaint against GSIS and Spouses Lagasca praying that the extrajudicialforeclosure be declared null and void. They allege that they signed the mortgage contracts not as sureties for the Lagasca spousesbut merely as accommodation party
Issue: WON the promissory note and mortgage deeds are negotiable.
Held: No. Section 29 of the NIL provides that an accommodation party is one who has signed an instrument as maker, drawer,acceptor of indorser without receiving value therefore, but is held liable on the instrument to a holder for value although the latter knew him to be only an accommodation party.
Both parties appears to be misdirected and their reliance misplaced. The promissory note, as well as the mortgage deeds subject of this case, are clearly not negotiable instrument because it did not comply with the fourth requisite to be considered as such under Sec. 1 of the NIL – they are neither payable to order nor to bearer. The note is payable to a specified party, the GSIS.
Traders Royal Bank v. CA (1997)
G.R. No. 93397 March 3, 1997Lessons Applicable: Requisites of negotiability to antedated and postdated instruments (Negotiable Instrument Law)
FACTS: Filriters (assigned) > Philfinance (still under the name of Filriters assigned) > Traders Royal Bank = ? (valid or not)
November 27, 1979: Filriters Guaranty Assurance Corporation (Filriters) executed a "Detached Assignment wherebyFilriters, as registered owner, sold, transferred, assigned and delivered unto Philippine Underwriters Finance Corporation(Philfinance) all its rights and title to Central Bank Certificates of Indebtedness (CBCI) of P500k and having an aggregatevalue of P3.5M
o The Detached Assignment contains an express authorization executed by the transferor intended to completethe assignment through the registration of the transfer in the name of PhilFinance
February 4, 1981: Traders Royal Bank (Traders) entered into a Repurchase Agreement w/ PhilFinance whereby inconsideration of the sum of P500,000.00, PhilFinance sold, transferred and delivered a CBCI w/ a face value of P500Kwhich CBCI was among those previously acquired by PhilFinance from Filriters
PhilFinance failed to repurchase on the agreed date of maturity, April 27, 1981, when the checks it issued in favor of petitioner were dishonored for insufficient funds
Philfinance transferred and assigned all, its rights and title in the CBCI to Traders
Respondent failed and refused to register the transfer as requested, and continues to do so notwithstanding petitioner'svalid and just title over the same and despite repeated demands in writing
Traders prayed for the registration by the Central Bank of the subject CBCI in its name.
CA affirmed RTC: subsequent assignment in favor of Traders Royal Bank null and void and of no force and effect.
Philfinance acquired no title or rights under CBCI which it could assign or transfer to Traders and which it can register withthe Central Bank
instrument is payable only to Filriters, the registered owner
7/28/2019 Santiago Nego
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ISSUE: W/N the CBCI is a negotiable instrument
HELD: NO. Petition is dismissed. CA affirmed.
CBCI is not a negotiable instrument in the absence of words of negotiability within the meaning of the negotiableinstruments law (Act 2031)
certificate of indebtedness
= certificates for the creation and maintenance of a permanent improvement revolving fund
similar to a "bond"
properly understood as acknowledgment of an obligation to pay a fixed sum of money
usually used for the purpose of long term loans
Philfinance merely borrowed the CBCI from Filriters, a sister corporation.
lack of any consideration = assignment is a complete nullity
Filriters to Philfinance did not conform to the "Rules and Regulations Governing Central Bank Certificates of Indebtedness" (Central Bank Circular No. 769, series of 1980) under which the note was issued.
Published in the Official Gazette on November 19, 1980, Section 3 thereof provides that any assignment of registeredcertificates shall not be valid unless made . . . by the registered owner thereof in person or by his representative dulyauthorized in writing
Alfredo O. Banaria, who signed the deed of assignment purportedly for and on behalf of Filriters, did not have the
necessary written authorization from the BOD Traders, being a commercial bank, cannot feign ignorance of Central Bank Circular 769, and its requirements.
The fact that Filfinance owns majority shares in Filriters is not by itself a ground to disregard the independent corporatestatus of Filriters.
Traders knew that Philfinance is not registered owner of the CBCI.
The fact that a non-owner was disposing of the registered CBCI owned by another entity was a good reason for petitioner to verify of inquire as to the title Philfinance to dispose to the CBCI.
Nemo potest nisi quod de jure potest — no man can do anything except what he can do lawfully.